Britain’s small businesses are cutting back on training as higher tax bills and rising employment costs force employers to make difficult choices, threatening to widen a skills gap just as thousands of young people consider their next step after receiving their A-level results.
Research from the Federation of Small Businesses (FSB) found that almost a third of small-business employers — 32 per cent — had reduced their training budgets because of higher tax bills. A further 27 per cent said spiralling labour costs had prompted them to cut training.
The figures highlight a tension at the heart of the Government’s efforts to reform Britain’s skills system. Small companies provide a major route into employment for young people, but face fewer resources than larger employers to absorb the costs and administration associated with apprenticeships, work experience and staff development.
The FSB’s report, Learning Curves: Shaping small business growth through skills, education and training, found that 80 per cent of small businesses that had recruited apprentices over the past three years had hired someone aged between 16 and 24.
But the costs of doing so remain a significant deterrent. Employment costs were cited as a barrier by 28 per cent of small firms, while 22 per cent pointed to training and assessment costs and another 22 per cent to the management time required. Paperwork was cited by 21 per cent.
The result is a system in which the businesses most likely to provide an entry point for young workers can also be those least equipped to navigate the bureaucracy surrounding training.
The FSB is calling for a national network to help small companies identify suitable training providers and courses, alongside a career matchmaking service connecting young people with local employers.
It also wants a simpler apprenticeship system, better brokerage between firms and potential recruits, and a one-off payment for businesses hosting their first work-experience placement.
The organisation argues that the education system is failing to exploit the potential of small employers. While 57 per cent of small businesses had engaged with at least one education, skills or welfare organisation during the past three years, 43 per cent had not engaged with any.
Among businesses that wanted closer links with schools, 27 per cent said they needed a clear point of contact, while 25 per cent wanted clearer advice and guidance.
The pressures extend beyond recruiting young people. Some 84 per cent of small-business employers provided training to existing staff during the past year, with 68 per cent paying for it themselves. Those that funded training spent an average of £1,810 per employee.
The FSB wants the Government to introduce a small-business training tax credit covering 20 per cent of training costs where courses are provided by an accredited provider.
With the Government pursuing reforms to technical education and skills, the business group argues that the next stage must focus on making the system work for the smaller employers that underpin local labour markets.
The stakes are particularly high for young people entering the workforce. Without intervention, rising costs could leave small firms with fewer resources to train the next generation — creating a vicious circle in which businesses struggle to find skilled workers while young people struggle to gain the experience employers demand.
Tina McKenzie, Interim National Chair at the Federation of Small Businesses (FSB), said: “Today is a milestone for hundreds of thousands of young people as they collect their A Level and T Level results and look ahead to what comes next. For some that will mean university, but others will take their first steps into work. These young people need a clear route to develop their skills and build their own successful careers.
“Small businesses already do a great job of taking on this fresh talent, but there needs to be a renewed focus by the Government on backing small firms and making the process easier for employers.
“It’s good to see the new Government’s focus on technical education, but the skills system must reflect the needs of small businesses. Initiatives like creating a new partnership to link up employers with young people and help them provide work experience, helping find the right courses, and creating a more small business friendly apprenticeship system would be invaluable.
“The right skills support can help small employers grow and build a stronger economy across the UK.”
Leave a Comment